Heritage Insurance Holdings, Inc.
For the period ended Sep 30, 2026. Filed Nov 6, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2026 · Filed Nov 6, 2026
HRTG$33.22-1.4%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-06-30; filed 2026-08-07.
0001193125-26-339815
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-09-30; filed 2026-11-06.
0001193125-26-451363
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 179 previous paragraphs and 180 current paragraphs.
97 unchanged; 40 reworded; 42 added; 40 removed; 2 previous and 1 current paragraphs rearranged.
Tables are not compared: 10 previous and 10 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (42)
Current report
The Company’s core strategic initiatives remain in place:
Current report
Premiums-in-force were $1.40 billion, down 2.8% from $1.44 billion in the third quarter of 2025, primarily due to commercial residential premium reductions resulting from competitive pricing pressure. A reduction in Florida personal lines in-force premiums was more than offset by personal lines growth in other states.
Current report
Net premiums earned increased 5.4% to $205.6 million from $195.1 million in the prior-year quarter, driven by lower ceded premiums more than offsetting the decrease in gross earned premiums.
Current report
Total revenue increased 3.2% to $219.2 million, reflecting higher net premiums earned and increased investment income. Other revenue decreased $2.6 million and net realized gains decreased $2.8 million, as both were elevated in the prior-year quarter.
Current report
Net investment income increased 17.3% to $11.4 million from $9.7 million in the third quarter of 2025, reflecting growth in invested assets. Cash and invested assets totaled $1.4 billion at quarter-end, up 8.8% from December 31, 2025. The investment portfolio remains conservatively positioned, with an emphasis on high-quality fixed-income securities and asset durations closely matched to liabilities.
Current report
Net losses and LAE were $81.4 million, up $6.6 million from $74.8 million in the prior-year quarter. The net loss ratio increased 1.3 points to 39.6% from 38.3% in the same quarter last year. Net weather and catastrophe losses for the current accident quarter were $33.6 million, compared with $13.8 million in the prior-year quarter, and included $9.1 million of hurricane losses and $6.7 million of other catastrophe losses. Net favorable prior-year loss development was $14.0 million in the third quarter of 2026, compared with $5.0 million in the prior-year quarter. As described in Note 13, the Company has experienced significant favorable net loss development throughout the first three quarters of 2026; however, this level of favorable net loss development is not expected to continue in the future the Company expects favorable net loss development to moderate as loss reserves now more closely reflect the current claims environment.
Current report
The net expense ratio improved 1.2 points to 33.4%, from 34.6% in the prior-year quarter. Policy acquisition costs were relatively flat compared to the third quarter of 2025. General and administrative expenses increased 5.2%, reflecting higher employee compensation and related costs, offset by a decrease in corporate insurance expense, primarily from a non-recurring premium refund.
Current report
The net combined ratio was relatively flat at 73.0% compared with 72.9% in the prior-year quarter, with a decrease in expense ratio nearly offsetting the increase in loss ratio.
Current report
Total revenue increased 3.2% to $219.2 million from $212.5 million in the prior-year quarter, driven by higher net premiums earned and net investment income, partially offset by lower realized gains and other income. The decrease in net realized gains resulted from the sale of real estate during the third quarter of 2025. Other revenue decreased $2.6 million, primarily from fee income which was elevated in the prior-year quarter. Net investment income increased 17.3% to $11.4 million from $9.7 million in the third quarter of 2025, reflecting growth in invested assets.
Current report
Premiums-in-force were $1.40 billion, down 2.8% from $1.44 billion in the third quarter of 2025, primarily due to lower commercial residential premiums-in-force, which decreased 16.1% due to competitive pricing pressure in the Florida market. The decline was rate-driven rather than exposure-driven, as commercial residential policies-in-force increased 5.7% and total insured value increased 7.5% over the same period. A reduction in Florida personal lines premiums-in-force was more than offset by personal lines growth in other states. We expect competitive pricing in the Florida commercial residential market to continue, and rate reductions on business already written have not yet fully earned in. As a result, we expect this trend to continue to adversely affect commercial residential premiums-in-force and net premiums earned. We expect this to be partially offset by commercial growth in other states.
Current report
Ceded premiums were $147.2 million in the third quarter of 2026, a decrease of $19.6 million, or 11.8%, from $166.8 million in the prior-year quarter. The reduction in ceded premiums reflected a full quarter of savings driven by the improved pricing of the Company’s June 2026 catastrophe excess of loss program as well as the decrease in the northeast net quota share program, which was effective December 31, 2025. The catastrophe excess of loss reinsurance placement generated treaty-year expense savings of $63.2 million which will be recognized over the contract period which incepted June 1, 2026. The decrease was partially offset by a one-time facultative and catastrophe excess of loss reinstatement premium adjustment recorded in the third quarter of 2026.
Current report
Net premiums earned increased $10.5 million, or 5.4%, to $205.6 million in the third quarter of 2026 from $195.1 million in the prior-year quarter, driven by lower ceded premiums more than offsetting the decrease in gross earned premiums.
Current report
Total operating expenses
Current report
Total operating expenses increased $7.7 million, or 5.4%, to $150.0 million in the third quarter of 2026 from $142.3 million in the prior-year quarter, primarily due to higher losses and LAE and general and administrative expenses, with relatively flat policy acquisition costs.
Current report
Net losses and LAE were $81.4 million, up $6.6 million from $74.8 million in the prior-year quarter. The net loss ratio increased 1.3 points to 39.6% from 38.3% in the same quarter last year. Net weather and catastrophe losses for the current accident quarter were $33.6 million, compared with $13.8 million in the prior-year quarter, and included $9.1 million of hurricane losses and $6.7 million of other catastrophe losses. Net favorable prior-year loss development was $14.0 million in the third quarter of 2026, compared with $5.0 million in the prior-year quarter.
Current report
Policy acquisition costs, net of ceding commission income, were $45.1 million for the three months ended September 30, 2026, essentially unchanged from $45.2 million for the comparable period in 2025. Lower gross acquisition costs of $1.1 million, reflecting lower premium volume, were offset by a $1.2 million decrease in ceding commission income resulting from lower ceding commission associated with the decrease in quota share program from 46% to 40% effective December 31, 2025.
Current report
General and administrative expenses increased $1.2 million, or 5.2%, to $23.5 million for the three months ended September 30, 2026, from $22.3 million for the comparable period in 2025. The increase was primarily due to higher employee-related costs, temporary labor, and lower ceding commission, partially offset by a $1.2 million decrease in corporate insurance expense due to a non-recurring premium refund.
Current report
Net income increased $0.7 million, or 1.4%, to $51.1 million in the third quarter of 2026, compared to $50.4 million in the prior-year quarter, driven by higher total revenue lower income tax expense and favorable prior-year loss development, each of which as described above.
Current report
Income tax expense was $16.6 million in the third quarter of 2026, compared to $17.9 million in the prior-year quarter. The effective tax rate was 24.5%, compared to 26.2% in the prior-year quarter, a decrease of 1.7 percentage points. The decrease was driven by previously estimated annualized pre-tax income and the related impact of permanent items. The Company calculates its interim income tax provision using an estimated annual effective tax rate, which may fluctuate throughout the year as income levels change and estimates are updated.
Current report
The net combined ratio was relatively flat at 73.0% compared with 72.9% in the prior-year quarter, with a decrease in the expense ratio nearly offsetting the increase in the net loss ratio.
Current report
The ceded premium ratio decreased 4.4 points to 41.7% for the three months ended September 30, 2026, from 46.1% in the prior-year quarter, primarily attributable to lower ceded premiums associated with the Company's catastrophe excess of loss program, partially offset by a one-time facultative and catastrophe excess of loss reinstatement premium adjustment recorded in the third quarter of 2026.
Current report
The net loss and LAE ratio increased 1.3 points to 39.6% for the three months ended September 30, 2026, from 38.3% in the prior-year quarter, primarily attributable to higher losses and LAE which was partially offset by favorable net loss development as described above, partially offset by higher net premiums earned.
Current report
The net expense ratio improved 1.2 points to 33.4%, from 34.6% in the prior-year quarter. Policy acquisition costs were relatively flat compared to the prior year quarter. General and administrative expenses increased 5.2%, reflecting higher employee compensation and related costs offset by a decrease in corporate insurance expense, primarily from a non-recurring premium refund.
Current report
Comparison of the nine months ended September 30, 2026 and 2025
Current report
Gross premiums written decreased $42.2 million, or 3.8%, to $1.06 billion for the nine months ended September 30, 2026, from $1.10 billion in the prior-year period. The decrease is driven primarily by lower written premium for Florida commercial residential business due to the competitive environment previously discussed.
Current report
Premiums-in-force were $1.40 billion at September 30, 2026, a decrease of 2.8% compared to $1.44 billion prior-year period, driven by the reduction in commercial residential business described above.
Current report
Gross premiums earned decreased $11.9 million, or 1.1%, to $1.06 billion for the nine months ended September 30, 2026, compared to $1.07 billion in the prior-year period, reflecting lower gross premiums written over the last twelve months which is driven primarily by lower premium associated with the commercial residential business.
Current report
Ceded premiums decreased $26.8 million, or 5.6%, to $451.1 million for the nine months ended September 30, 2026, compared to $477.9 million in the prior-year period, primarily due to the reduction associated with improved pricing on the June 2026 catastrophe excess-of-loss program and the reduction in the net quota share cession from 46% to 40% effective December 31, 2025. The ceded premium ratio improved to 42.7% from 44.7%.
Current report
Net premiums earned increased $14.9 million, or 2.5%, to $606.4 million for the nine months ended September 30, 2026, compared to $591.5 million in the prior-year period, as the $26.8 million decrease in ceded premiums more than offset the $11.9 million decrease in gross premiums earned.
Current report
Net investment income increased $4.5 million, or 16.6%, to $31.8 million for the nine months ended September 30, 2026, as compared to $27.3 million in the prior-year period, primarily due to a larger fixed maturity portfolio, as the Company redeployed $168.6 million of cash into higher-yielding, longer-duration securities.
Current report
Total operating expenses
Current report
Losses and loss adjustment expenses decreased $15.7 million, or 6.3%, to $234.0 million for the nine months ended September 30, 2026, compared to $249.8 million in the prior-year period, driven primarily by favorable net prior-year loss development, partially offset by higher weather losses. The net loss ratio improved 3.6 points to 38.6% from 42.2%. Weather losses for the nine months ended September 30, 2026 were $81.9 million compared to weather losses for the prior-year period of $69.8 million. Catastrophe weather losses amounted to $40.2 million and $31.8 million for the nine months ended September 30, 2026 and 2025, respectively. Net favorable prior year loss development was $45.5 million, compared with $15.1 million in the prior-year period.
Current report
Policy acquisition costs, net of ceding commission income, increased $1.8 million, or 1.4%, to $136.0 million for the nine months ended September 30, 2026, compared to $134.1 million in the prior-year period, primarily due to lower ceding commission income from the reduced quota share cession, partially offset by lower commission expense on lower premiums written.
Current report
General and administrative expenses were $72.2 million for the nine months ended September 30, 2026, compared to $70.6 million in the prior-year period, an increase of $1.6 million, or 2.3%. The increase was primarily due to higher employee compensation and related costs, and lower ceding commission income allocated to general and administrative expenses, partially offset by lower insurance expense, which included a nonrecurring premium refund.
Current report
Net income for the nine months ended September 30, 2026 was $149.3 million, or $4.94 per diluted share, compared to net income of $128.9 million, or $4.17 per diluted share, for the corresponding period in 2025. The increase was primarily driven by higher net premiums earned and higher net investment income and lower net losses incurred, partially offset by lower realized gains and other income and higher policy acquisition costs and general and administrative expenses as described above. Net premiums earned increased 2.5%, and net losses and LAE decreased 6.3%, as discussed above. Policy acquisition costs increased 1.4%, primarily due to lower ceding commission income. General and administrative expenses increased 2.3% as described above.
Current report
The net loss and LAE ratio was 38.6% for the nine months ended September 30, 2026, a 3.6 point improvement from 42.2% in the prior-year period, reflecting a 6.3% decrease in net losses and LAE, driven primarily by favorable net prior-year loss development, and a 2.5% increase in net premiums earned, as described above.
Current report
The net expense ratio improved 0.3 points to 34.3% for the nine months ended September 30, 2026, from 34.6% in the prior-year period, as the 2.5% increase in net premiums earned outpaced increases of 1.4% in policy acquisition costs and 2.3% in general and administrative expenses.
Current report
Cash and cash equivalents were $532.1 million at September 30, 2026, compared with $559.3 million at December 31, 2025, a decrease of $27.2 million. Net cash provided by operating activities of $176.2 million was more than offset by $159.9 million used in investing activities and $43.5 million used in financing activities. Investing activities consisted primarily of net purchases of fixed maturity securities of $168.6 million as the Company reinvested excess cash into its investment portfolio, partially offset by the January 2026 collection of the $11.0 million promissory note received in connection with the 2025 sale of real estate. Financing activities consisted primarily of repurchases of common stock of $26.3 million, tax withholding on share-based awards of $8.9 million and debt repayments of $8.3 million.
Current report
Other Assets
Current report
Other assets decreased $18.2 million to $15.6 million at September 30, 2026, from $33.8 million at December 31, 2025, primarily due to the January 2026 collection of an $11.0 million promissory note received in connection with the 2025 sale of property, as well as the application of premium remittances held in suspense and the amortization of prepaid expenses.
Showing the first 40 of 42 passages. Open the source sections for the rest.
Removed paragraphs (40)
Previous report
The Company has focused on three main strategic initiatives aimed at achieving consistent long-term quarterly earnings and driving shareholder value, which initiatives will remain in place while the Company also expands its strategy to include its 2026 initiatives:
Previous report
Losses and loss adjustments expenses were $61.1 million, down $14.6 million from $75.6 million in the prior-year quarter. The net loss ratio improved 8.1 points to 30.4% from 38.5% in the same quarter last year. Net weather losses for the current accident quarter were $11.5 million, compared with $12.5 million in the prior-year quarter. Net favorable prior-year loss development was $23.4 million in the second quarter of 2026, compared with $2.3 million in the prior-year quarter. The favorable reserve development recorded in the second quarter of 2026 reflects several positive trends that have become increasingly evident over the past several quarters. Key drivers include the stabilization of claims closure timelines, a sustained reduction and subsequent stabilization in claim frequency, severity trending within normal ranges and fewer late reported claims combining to result in claims closing below expectations.
Previous report
The ceded premium ratio decreased to 42.7% from 44.5% in the prior-year quarter, an improvement of 1.8 percentage points, primarily driven by a reduction in the northeast net quota share reinsurance program from 46% to 40% at December 31, 2025. Additionally, the ceded premium ratio benefited from more favorable reinsurance terms of the June 2026 CAT XOL program.
Previous report
Net loss ratio decreased to 30.4%, an 8.1 point improvement from 38.5% in the same quarter last year, driven by lower net losses and LAE and relatively flat net premiums earned.
Previous report
The net expense ratio was 34.5%, essentially flat compared with 34.4% in the prior-year quarter. Policy acquisition costs increased 5.5% from the prior year quarter, primarily due to lower ceding commissions following the 2025 year-end, reduction in the net quota share reinsurance program. General and administrative expenses decreased 2.5%, reflecting lower regulatory costs and municipality tax expenses.
Previous report
The net combined ratio improved 8.0 points to 64.9% from 72.9% in the prior-year quarter, primarily driven by the lower net loss ratio discussed above.
Previous report
Net investment income increased to $10.6 million, a 17.3% increase from $9.0 million in the second quarter of 2025, driven mostly by a higher balance of invested assets. We continue to manage our investment portfolio by maintaining a conservative portfolio with high quality investments and duration liability matched.
Previous report
*NM - Not Meaningful
Previous report
Total revenue increased 3.0% to $214.2 million, reflecting higher net premiums earned and increased investment income. Net premiums earned increased as a result of the reduction of the ceded premium due to the reduction of the northeast net quota-share program effective December 31, 2025 and due to savings in the recently placed catastrophe XOL program. Net investment income rose 17.3% to $10.6 million in the second quarter of 2026 from $9.0 million in the prior-year quarter, driven by growth in invested assets. The investment portfolio remains conservatively positioned, emphasizing high-quality fixed-income investments with asset durations closely matched to liabilities.
Previous report
Premiums-in-force were $1.41 billion as of second quarter 2026, a decrease of 1.4% compared to $1.43 billion as of second quarter 2025, driven mostly by a reduction of commercial residential in-force premium driven by competitive pressures as described above.
Previous report
Ceded premiums were $150.0 million in the second quarter of 2026, a decrease of $7.3 million, or 4.6%, from $157.3 million in the prior-year quarter, primarily driven by the decrease in the northeast net quota share program at year-end 2025 as well as the benefit from one month of the improved pricing of the June 2026 CAT XOL program.
Previous report
Net premiums earned were $201.1 million in the second quarter of 2026, an increase of $4.8 million, or 2.4%, from $196.3 million in the prior-year quarter. Net premiums earned benefited from the decrease in ceded premiums, which more than offset the impact of lower gross premiums earned.
Previous report
Total expenses
Previous report
Total expenses decreased to $130.3 million in the second quarter of 2026 from $143.2 million in the prior-year quarter, an improvement of 9.0%. As discussed below, the decrease was primarily attributable to lower losses and loss adjustment expenses (LAE) and, to a lesser extent, lower general and administrative expenses, partially offset by higher policy acquisition costs.
Previous report
Losses and LAE incurred were $61.1 million in the second quarter of 2026, a decrease of $14.6 million, or 19.3%, from $75.6 million in the prior-year quarter. The net loss ratio decreased 8.1 points to 30.4% from 38.5% in the prior-year quarter, primarily driven by increased favorable prior-year loss reserve development. Net favorable prior-year loss reserve development was $23.4 million, compared to $2.3 million in the prior-year quarter. Net weather losses for the current accident quarter were $11.5 million, compared to $12.5 million in the prior-year quarter.
Previous report
Policy acquisition costs were $45.5 million in the second quarter of 2026, an increase of 5.5% from $43.1 million in the prior-year quarter. The increase was primarily driven by a reduction in ceding commissions and higher policy related costs.
Previous report
General and administrative expenses were $23.8 million in second quarter 2026, an improvement of 2.5% compared to $24.4 million in the prior year quarter. The decrease was primarily attributable to lower municipal tax expense and regulatory compliance costs.
Previous report
The income tax expense was $20.5 million in second quarter 2026 compared to $15.0 million in the prior year quarter, with the higher provision in the current quarter driven by higher pre-tax earnings compared to the prior year quarter. The effective tax rate for the current year quarter was 24.9% compared to 23.8% in the prior year quarter, an increase of 1.1 point. We calculate the provision for income taxes during interim reporting periods by applying an estimate of the effective tax rate for the full year. The variance is driven by pre-tax income and permanent items. The effective tax rate can fluctuate throughout the year as income changes and estimates used in each quarterly tax provision are updated with additional information.
Previous report
The effective tax rate can fluctuate throughout the year as estimates used in the quarterly tax provision are updated with additional information.
Previous report
The net combined ratio was 64.9% in second quarter 2026, a 8.0 point improvement from 72.9% in the prior year quarter. The decrease primarily stems from a lower net loss and LAE ratio as described below.
Previous report
The ceded premium ratio was 42.7% in the second quarter of 2026, representing a modest improvement of 1.8 points from 44.5% in the prior-year quarter.
Previous report
The net loss and LAE ratio was 30.4% in second quarter 2026, a 8.1 point improvement from 38.5% in the prior year quarter. The reduction was driven by both a reduction in losses and LAE and higher net earned premium as described above.
Previous report
The net expense ratio was 34.5%, essentially flat compared with 34.4% in the prior-year quarter. Policy acquisition costs increased 5.5% year over year, primarily due to lower ceding commissions following the December 31, 2025, reduction in the net quota share reinsurance program. General and administrative expenses decreased 2.5%, reflecting lower regulatory costs and municipality tax expenses.
Previous report
Comparison of the Six Months Ended June 30, 2026 and 2025
Previous report
Gross premiums written were $735.2 million for the six month period ended June 30, 2026, down 4.1% from $767.0 million. The decrease primarily relates to a reduction of written premium for commercial residential business, driven by competitive market conditions.
Previous report
Premiums-in-force were $1.41 billion as of second quarter 2026, a decrease of 1.4% compared to $1.43 billion as of second quarter 2025, driven by the reduction on commercial residential business.
Previous report
Gross premiums earned were $704.7 million for the six month period ended June 30, 2026, a decrease of 0.4% from $707.4 million in the prior year period, reflecting a reduction in commercial residential business driven by competitive pressures as described above, which was mostly offset by higher gross premiums earned for the personal residential business.
Previous report
Ceded premiums were $303.9 million for the six month period ended June 30, 2026, down 2.3% from $311.1 million in the prior year period. The decrease relates primarily to the reduction in the northeast net quota share and the reduction in cost of the June 2026 CAT XOL program.
Previous report
Net premiums earned increased 1.1% to $400.8 million for the six month period ended June 30, 2026, compared to $396.4 million for the prior-year period. The increase was primarily attributable to lower ceded premiums, which more than offset a modest decline in gross premiums earned, as discussed above.
Previous report
Total expenses
Previous report
Losses and LAE incurred were $152.7 million for the six month period ended June 30, 2026, down 12.8% from $175.0 million in the prior year period. The decrease primarily stems from favorable net loss development and lower catastrophe losses, as winter storms in 2026 were lower than the California wildfire losses of during the first quarter of 2025. Net weather and catastrophe losses for the first six months of 2026 were $48.2 million, a decrease of $7.9 million from $56.1 million in the prior year period. Catastrophe losses were $24.4 million compared to $31.8 million in the prior-year period. Other weather losses totaled $23.8 million, a decrease from the prior year period amount of $24.3 million. Net favorable prior year loss development was $31.6 million for the six months of 2026 compared to net favorable loss development of $10.0 million for the prior year period, reflecting more favorable loss emergence and corresponding reserve releases on prior accident years than were recognized in the comparable 2025 period. The favorable reserve development recorded in the second quarter of 2026 reflects several positive trends that have become increasingly evident over the past several quarters. Key drivers include the stabilization of claims closure timelines, a sustained reduction and subsequent stabilization in claim frequency, severity trending within normal ranges and fewer late reported claims all combining to result in claims closing below expectations.
Previous report
Policy acquisition costs increased 2.1% to $90.8 million for the six months ended June 30, 2026, compared to $89.0 million for the comparable 2025 period. The increase was primarily attributable to lower ceding commission resultant from the reduction of the northeast net quota share program.
Previous report
General and administrative expenses were $48.7 million for the six months ended June 30, 2026, compared with $48.3 million for the comparable period in 2025. The modest increase of 0.8% reflects stable operating expenses and was generally consistent with the prior-year period.
Previous report
Net income for the six months ended June 30, 2026 was $98.2 million, or $3.23 per diluted share, compared to net income of $78.5 million, or $2.54 per diluted share, for the corresponding period in 2025. The increase was primarily driven by a significant decrease in losses and loss adjustment expenses (LAE), higher net premiums earned, and relatively stable operating expenses. The improvement in results reflects the favorable impact of rate increases, underwriting actions, and exposure management initiatives implemented over the past several years, which continued to benefit operating performance during the first half of 2026. These actions contributed to a 1.1% increase in net premiums earned and a 12.8% decrease in net losses and LAE, as discussed above. Policy acquisition costs increased 2.1%, primarily due to lower ceding commission income. General and administrative expenses increased 0.8% and remained relatively consistent with the prior-year period.
Previous report
The net loss and LAE ratio was 38.1% for the six month period ended June 30, 2026, a 6.1 point improvement from 44.2% in the prior year period, reflecting higher net premiums earned, coupled with a decrease in net losses and LAE as described above.
Previous report
The net expense ratio was 34.8% for the six months ended June 30, 2026, compared with 34.6% for the corresponding period in 2025, and remained generally consistent with the prior-year period.
Previous report
Cash and cash equivalents were $587.6 million at June 30, 2026, compared with $559.3 million at December 31, 2025, an increase of $28.3 million. The increase was primarily attributable to cash received from premium collections and investment income , partially offset by cash used for claim payment, reinsurance costs, debt paydowns, and stock purchases.
Previous report
At June 30, 2026, reinsurance payable increased by $268.2 million to $501.0 million from $232.8 million at December 31, 2025. The increase was primarily driven by the June 1, 2026 renewal of the Company's annual reinsurance programs.
Previous report
Total Shareholders’ Equity
Previous report
December 31, 2025. As described above, the increase was primarily attributable to cash received from premium collections and investment income earned on sweep accounts, partially offset by cash used to pay off existing debt and make stock repurchases.
Reworded paragraphs (40)
Previous wording
You should read the following discussion in conjunction with our condensed consolidated financial statements and related notes and other information included elsewhere in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2025 (as amended“2025 Form 10-K”). Unless the context requires otherwise, as used in this Form 10-Q, the terms “we”, “us”, “our”, “the Company”, “our Company”, and similar references refer to Heritage Insurance Holdings, Inc., a Delaware corporation, and its subsidiaries.
Current wording
You should read the following discussion in conjunction with our condensed consolidated financial statements and related notes and other information included elsewhere in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2025 (as amended, the “2025 Form 10-K”). Unless the context requires otherwise, as used in this Form 10-Q, the terms “we”, “us”, “our”, “the Company”, “our Company”, and similar references refer to Heritage Insurance Holdings, Inc., a Delaware corporation, and its subsidiaries.
Previous wording
We are a super-regional property and casualty insurance holding company that primarily provides personal and commercial residential insurance products across our multi-state footprint. We provide personal residential insurance in Alabama, California, Connecticut, Delaware, Florida, Georgia, Hawaii, Maryland, Massachusetts, Mississippi, New Jersey, New York, North Carolina, Rhode Island, South Carolina, Texas, and Virginia and commercial residential insurance in Florida, Hawaii, New Jersey, and New York. We provide personal residential insurance in Florida, Hawaii, and South Carolina on both an admitted and non-admitted basis and in California on a non-admitted basis only. We also provide commercial insurance in the State of Texas on an excess and surplus lines basis. As a vertically integrated insurer, we control or manage substantially all aspects of risk management, underwriting, claims processing and adjusting, actuarial rate making and reserving, customer service, and distribution. Our financial strength ratings are important to us in establishing our competitive position and can impact our ability to write policies.
Current wording
We are a super-regional property and casualty insurance holding company that primarily provides personal and commercial residential insurance products across our multi-state footprint. We provide personal residential insurance in Alabama, California, Connecticut, Delaware, Florida, Georgia, Hawaii, Maryland, Massachusetts, Mississippi, New Jersey, New York, North Carolina, Rhode Island, South Carolina, and Virginia and commercial residential insurance in Florida, Hawaii, New Jersey, and New York. We provide property insurance in Florida, Hawaii, and South Carolina on both an admitted and non-admitted basis and in California and Texas on a non-admitted basis only. As a vertically integrated insurer, we control or manage substantially all aspects of risk management, underwriting, claims processing and adjusting, actuarial rate making and reserving, customer service, and distribution. Our financial strength ratings are important to us in establishing our competitive position and can impact our ability to write policies.
Previous wording
Generating underwriting profit through rate adequacy and more selective underwriting
Current wording
Generating underwriting profit through rate adequacy and continued selective underwriting.
Previous wording
To continue its progress, the Company expects to also focus on the following profitability initiatives in 2026:
Current wording
The Company continues to focus on the following profitability initiatives:
Previous wording
Target geographies open for new business, while closely managing risk and exposure
Current wording
Target geographies for new business, while closely managing risk and exposure.
Previous wording
Leverage infrastructure and capabilities to foster further growth, which includes our entry to the State of Texas on an excess and surplus lines basis.
Current wording
Leverage infrastructure and capabilities to foster future growth, which includes our entry to the State of Texas on an excess and surplus lines basis.
Previous wording
We address reinsurance and loss cost trends in the property insurance sector through rates and inflation guard factors. Over the last several years, we have filed and been approved by state regulators for rate increases to achieve rate adequacy. Our rates are now adequate in over 90% of our territories, which are currently open for new business. We experienced intentional growth of our commercial residential business during 2025, with in-force premium in that line of business decreasing in 2026, driven primarily by competitive market conditions. To the extent that reinsurance and loss cost trends decline, our rates may be adjusted downward in the future. New rates, which are subject to approval by our regulators, become effective when a policy is written or renewed, and the premium is earned pro rata over the policy period of one year. As a result of this timing, it can take up to twenty-four months for the complete impact of a rate change to be fully earned and impact our financial statements.
Current wording
We address reinsurance and loss cost trends in the property insurance sector through rates and inflation guard factors. Over the last several years, we have filed and been approved by state regulators for rate increases to achieve rate adequacy. Our rates are now adequate in nearly all of our territories which are currently open for new business. We experienced intentional growth of our commercial residential business during 2025, with in-force premium in that line of business decreasing in 2026, driven primarily by competitive market conditions. To the extent that reinsurance and loss cost trends change, our rates may be adjusted in the future to reflect those changes. New rates, which are subject to approval by our regulators, become effective when a policy is written or renewed, and the premium is earned pro rata over the policy period of one year. As a result of this timing, it can take up to twenty-four months for the complete impact of a rate change to be fully earned and impact our financial statements.
Previous wording
We invest in data analytics, using software and experienced personnel, to continuously evaluate our underwriting criteria and manage exposure to catastrophe and other losses. Our policy retention has remained consistent in the upper 80’s to low 90’s. While we believe our rates are generally competitive with private market insurers operating in our space, we are focused on prudent growth in 2026 while managing exposure and ensuring rate adequacy throughout our book of business as well as providing high levels of customer service to our agents and policyholders.
Current wording
We invest in data analytics, using software and experienced personnel, to continuously evaluate our underwriting criteria and manage exposure to catastrophe and other losses. Our policy retention has remained consistent with most states in the upper 80s to low 90s. While we believe our rates are generally competitive with private market insurers operating in our space, we are focused on prudent growth in 2026 and in the future, while managing exposure and ensuring rate adequacy throughout our book of business, as well as providing high levels of customer service to our agents and policyholders.
Previous wording
We successfully completed the placement of our catastrophe excess of loss reinsurance program with higher coverage levels than the prior-year while achieving a lower total and risk-adjusted cost. As operating and reinsurance costs improve, we expect policyholders to benefit through more competitive pricing while we continue to maintain appropriate underwriting margins. This should also favorably impact the ceded premium over the next four quarters.
Current wording
We successfully completed the placement of our catastrophe excess of loss reinsurance program with higher coverage levels than the prior-year while achieving a lower total and risk-adjusted cost. As operating and reinsurance costs improve, we expect policyholders to benefit through more competitive pricing while we continue to maintain appropriate underwriting margins. This should also favorably impact the ceded premium through the remainder of the treaty year ending May 31, 2027.
Previous wording
Second quarter 2026 net income increased to $61.7 million, or $2.05 per diluted share, compared with $48.0 million, or $1.55 per diluted share, in the prior-year quarter. The increase was primarily driven by lower losses and higher revenue. Revenue growth reflected lower ceded premiums, which increased net premiums earned, as well as higher investment income from a larger invested asset base. Losses decreased primarily due to favorable prior-year loss development and lower weather-related losses.
Current wording
For the third quarter of 2026 net income increased to $51.1 million, or $1.72 per diluted share, compared with $50.4 million, or $1.63 per diluted share, in the prior-year quarter. Diluted earnings per share increased 5.5%, benefiting from a 4.0% reduction in diluted shares outstanding primarily from share repurchases. Third quarter results absorbed $15.8 million of pre-tax catastrophe losses, including $9.1 million from Hurricanes Lala and Lowell, and $6.7 million from other catastrophe weather events, primarily the late September Nor’easter, compared with no catastrophe losses in the prior-year quarter. Additionally, the Company experienced favorable loss development during the quarter as described below. Revenue growth reflected lower ceded premiums, which increased net premiums earned, as well as higher investment income from a larger invested asset base.
Previous wording
Gross premiums written decreased 5.5% to $388.4 million from $411.0 million in the prior-year quarter, primarily reflecting lower commercial residential premiums, partially offset by growth in personal lines. The Florida commercial residential market remains highly competitive and management continues to emphasize underwriting discipline and adequate profitability by writing business that meets our pricing and risk standards. Commercial premiums are expected to level off in the second half of the year as we continue to grow this business outside of Florida where business conditions are more favorable while leveraging our strong Florida agency network.
Current wording
Gross premiums written decreased 3.1% to $322.8 million from $333.2 million in the prior-year quarter, primarily reflecting lower commercial residential premiums, partially offset by growth in personal lines. The Florida commercial residential market remains highly competitive, and management continues to emphasize underwriting discipline and adequate profitability by writing business that meets Heritage’s pricing and risk standards.
Previous wording
Gross premiums earned were $351.2 million, compared to $353.6 million earned in the prior year quarter, reflecting the decline in commercial residential business driven by the competitive market conditions described above.
Current wording
Gross premiums earned were $352.8 million, compared with $362.0 million in the prior-year quarter, reflecting the decline in commercial residential business due to the competitive market conditions discussed above.
Previous wording
Net premiums earned increased 2.4% to $201.1 million from $196.3 million in the prior-year quarter, driven by lower ceded premiums. The reduction in ceded premiums reflected the decrease in the northeast net quota share program at year-end 2025 and one month of savings driven by the improved pricing of our June 2026 catastrophe excess of loss ("CAT XOL") program. The CAT XOL placement generated treaty-year expense savings of $63.2 million, of which seven-twelfths will be recognized in 2026.
Current wording
Ceded premiums decreased 11.8% to $147.2 million, compared with $166.8 million in the prior-year quarter. The reduction in ceded premiums reflected a full quarter of savings driven by the improved pricing of the Company’s June 2026 catastrophe excess of loss program as well as the decrease in the northeast net quota share program, which was effective December 31, 2025.
Previous wording
The effective tax rate was 24.9% compared to 23.8% in the prior year second quarter. We calculate the provision for income taxes during interim reporting periods by applying an estimate of the effective tax rate for the full year. The effective tax rate is 1.1 points higher than the prior quarter, with the variance driven by pre-tax income and permanent items. The effective tax rate can fluctuate throughout the year as income changes and estimates used in each quarterly tax provision are updated with additional information.
Current wording
The effective tax rate was 24.5% compared to 26.2% in the prior-year quarter. We calculate the provision for income taxes during interim reporting periods by applying an estimate of the effective tax rate for the full year. The effective tax rate is 1.7 points lower than the prior-year quarter, with the variance driven by previously estimated annualized pre-tax income and the related impact of permanent items. The effective tax rate can fluctuate throughout the year as income changes and estimates used in each quarterly tax provision are updated with additional information.
Previous wording
Gross premiums written were $388.4 million, down 5.5% from $411.0 million in the prior-year quarter, primarily reflecting lower commercial residential premiums, partially offset by growth in personal lines business. The Florida commercial residential market remains highly competitive, and management continues to prioritize underwriting discipline and adequate profitability, writing only business that meets Heritage's pricing and risk standards. We expect commercial production to flatten during the second half of the year as we continue to make progress growing this business outside of Florida and with our strong agency network within Florida.
Current wording
Gross premiums written decreased $10.4 million, or 3.1%, to $322.8 million for the three months ended September 30, 2026, from $333.2 million in the prior-year quarter. The decline primarily reflected lower commercial residential premiums, partially offset by growth in personal lines. With the Florida commercial residential market remaining highly competitive, management continues to prioritize underwriting discipline and adequate profitability, writing only business that meets Heritage’s pricing and risk standards.
Previous wording
Gross premiums earned of $351.2 million were down 0.7% from $353.6 million in the prior year quarter, reflecting a reduction in commercial residential business driven by competitive pressures as described above, which was mostly offset by higher gross premiums earned for the personal residential business.
Current wording
Gross premiums earned of $352.8 million were down 2.5% from $362.0 million in the prior-year quarter, reflecting a reduction in commercial residential business driven by competitive pressures as described above.
Previous wording
Net investment income was $10.6 million in the second quarter of 2026, an increase of $1.6 million, or 17.3%, from $9.0 million in the prior-year quarter. The increase was primarily attributable to higher average cash and invested asset balances and the reinvestment of maturing assets at higher yields, partially offset by lower yields on money market funds and bank sweep accounts resulting from the current interest rate environment.
Current wording
Net investment income increased $1.7 million, or 17.3%, to $11.4 million in the third quarter of 2026 from $9.7 million in the prior-year quarter. The increase was primarily driven by higher average cash and invested asset balances and the reinvestment of maturing securities at higher yields, partially offset by lower yields on money market funds and bank sweep accounts due to the current interest rate environment.
Previous wording
Interest expense, net was $1.7 million in the second quarter of 2026, slightly lower than $1.8 million for the prior year quarter, primarily due to lower debt balances outstanding.
Current wording
Interest expense, net was $1.5 million in the third quarter of 2026, lower than $1.9 million for the prior-year quarter, primarily due to lower debt balances outstanding.
Previous wording
Total revenue increased 1.7% to $426.9 million for the six month period ended June 30, 2026, compared to $419.6 million for the corresponding period in 2025, primarily reflecting higher net premiums earned and increased investment income. Net investment income increased 16.2% to $20.5 million for the first six months of 2026, compared to $17.6 million in the prior-year period, driven principally by growth in invested assets. Our investment portfolio remains conservatively positioned, with an emphasis on high-quality fixed-income securities and asset durations that are closely matched to our liability profile.
Current wording
Total revenue increased 2.2% to $646.1 million for the nine months ended September 30, 2026, from $632.0 million in the prior-year period, primarily attributable to higher net premiums earned and net investment income, partially offset by lower realized gains and other revenue. The decrease in net realized gains resulted from the sale of real estate during the prior-year period. Other revenue decreased $2.6 million, primarily from fee income which was elevated in the prior-year period. Net investment income increased 16.6% to $31.8 million from $27.3 million in the prior-year period, primarily attributable to growth in invested assets. The investment portfolio remained conservatively positioned, with an emphasis on high-quality fixed-income securities and asset durations closely matched to the Company's liability profile.
Previous wording
Total expenses were $292.2 million for the six month period ended June 30, 2026, down 6.4% compared to $312.2 million in the prior year period. As described below, losses and LAE declined significantly, policy acquisition costs declined, and general and administrative expenses increased.
Current wording
Total operating expenses were $442.2 million for the nine month period ended September 30, 2026, down 2.7% compared to $454.5 million in the prior-year period. As described below, losses and LAE declined significantly, which was partly offset by higher policy acquisition costs and general and administrative expenses.
Previous wording
Interest expense, net was $3.5 million for the six month period ended June 30, 2026 , a decrease of 19.5% compared to $4.3 million for the prior year period, The decrease was attributed to the impact from the reduction of debt obligations.
Current wording
Interest expense, net was $5.0 million for the nine month period ended September 30, 2026, a decrease of 19.1% compared to $6.2 million for the prior-year period. The decrease was attributed to the favorable impact from the reduction of debt obligations.
Previous wording
The income tax expense was $33.0 million for the six month period ended June 30, 2026 compared to $24.5 million in the prior year period, with the higher income tax provision in the current period driven by higher pre-tax earnings compared to the prior year period. The effective tax rate for the current year period was 25.2% compared to 23.8% in the prior year period. We calculate the provision for income taxes during interim reporting periods by applying an estimate of the effective tax rate for the full year. The variance is driven by pre-tax income and permanent items. The effective tax rate can fluctuate throughout the year as income changes and estimates used in each quarterly tax provision are updated with additional information.
Current wording
Income tax expense increased $7.2 million, or 17.0%, to $49.6 million for the nine months ended September 30, 2026, compared to $42.4 million for the prior-year period, primarily due to higher pre-tax income. For the nine months ended September 30, 2026 and 2025, the effective tax rate was 24.9% and 24.7%, respectively. We calculate the provision for income taxes during interim reporting periods by applying an estimate of the effective tax rate for the full year. The variance is driven by pre-tax income and permanent items. The effective tax rate can fluctuate throughout the year as income changes and estimates used in each quarterly tax provision are updated with additional information.
Previous wording
The net combined ratio was 72.9% for the six month period ended June 30, 2026, compared to 78.8% for the comparable period in 2025, representing an improvement of 5.9 points. The improvement primarily reflects a lower net loss and LAE ratio, driven by primarily by favorable loss development and lower weather losses, partially offset by a modest increase in the net expense ratio, as described below.
Current wording
The net combined ratio was 72.9% for the nine months ended September 30, 2026, compared to 76.8% for the comparable period in 2025, an improvement of 3.9 points. The improvement primarily reflects a 3.6 point decrease in the net loss and LAE ratio to 38.6%, driven primarily by favorable net prior-year loss development, and a 0.3 point decrease in the net expense ratio to 34.3%, as described below.
Previous wording
The ceded premium ratio was 43.1% for the six months ended June 30, 2026, compared to 44.0% for the comparable period in 2025. The 0.8 point improvement was primarily attributable to a decrease in ceded premiums related to a reduction of the northeast net quota share program.
Current wording
The ceded premium ratio was 42.7% for the nine months ended September 30, 2026, compared to 44.7% for the comparable period in 2025. The 2.0 point improvement was primarily attributable to lower ceded premiums resulting from improved pricing on the June 2026 catastrophe excess-of-loss program and the reduction of the northeast net quota share cession from 46% to 40% effective December 31, 2025.
Previous wording
Fixed maturity securities increased by $88.7 million to $801.9 million at June 30, 2026, from $713.2 million at December 31, 2025, primarily reflecting the reinvestment of operating cash flows and excess cash into the investment portfolio.
Current wording
Fixed maturity securities increased $139.4 million to $852.6 million at September 30, 2026, from $713.2 million at December 31, 2025, primarily reflecting net purchases of $168.6 million as the Company reinvested operating cash flows and excess cash into the investment portfolio, partially offset by a $29.8 million increase in net unrealized losses driven by higher interest rates.
Previous wording
At June 30, 2026, reinsurance recoverable on paid and unpaid claims totaled $305.2 million, a decrease of $13.4 million from $318.6 million at December 31, 2025. The decrease was primarily driven by claim payments, a reduction in ultimate losses for certain catastrophic events, and collections of reinsurance recoveries.
Current wording
At September 30, 2026, reinsurance recoverable on paid and unpaid claims totaled $218.9 million, a decrease of $99.7 million from $318.6 million at December 31, 2025. The decrease was primarily driven by claim payments, a reduction in ultimate losses for certain catastrophic events, and collection of reinsurance.
Previous wording
At June 30, 2026, prepaid reinsurance premium increased by $153.7 million to $460.7 million from $307.0 million at December 31, 2025. This balance represents unearned ceded premium and the increase is primarily attributable to the execution of new reinsurance treaties.
Current wording
At September 30, 2026, prepaid reinsurance premium increased by $76.9 million to $384.0 million from $307.0 million at December 31, 2025. This balance represents unearned ceded premium and the increase is primarily attributable to the execution of new catastrophe excess of loss reinsurance treaties effective June 1, 2026.
Previous wording
At June 30, 2026, unpaid losses and loss adjustment expenses decreased by $97.5 million to $482.0 million from $579.5 million at December 31, 2025. The decrease primarily reflects claims payments during the period, lower losses during the quarter and a reduction of ultimate losses for certain catastrophic events.
Current wording
At September 30, 2026, unpaid losses and loss adjustment expenses decreased $119.6 million to $459.9 million from $579.5 million at December 31, 2025. The decrease primarily reflects claim payments and favorable development of prior accident year losses, partially offset by weather-related losses incurred during 2026.
Previous wording
Total shareholders’ equity increased $62.5 million to $567.7 million at June 30, 2026 from $505.3 million at December 31, 2025, primarily reflecting net income for the quarter. This increase was partially offset by treasury stock repurchases of approximately $24.6 million, representing the repurchase of 1,001,508 shares during the first six months of 2026, as well as an increase in accumulated other comprehensive loss due to higher unrealized losses and a reduction in additional paid-in capital related to surrendered restricted stock for tax withholdings.
Current wording
Total stockholders’ equity increased $93.9 million to $599.1 million at September 30, 2026 from $505.3 million at December 31, 2025, primarily reflecting net income of $149.3 million for the nine months. This increase was partially offset by repurchases of 1,101,508 shares of common stock for $27.9 million, a $22.7 million increase in accumulated other comprehensive loss due to higher unrealized losses on fixed maturity securities, and a $4.8 million decrease in additional paid-in capital, as shares surrendered for tax withholding on vested restricted stock exceeded stock-based compensation expense.
Previous wording
Our principal sources of liquidity include cash flows generated from operations, existing cash and cash equivalents, our marketable securities balances and borrowings available under our Credit Facilities. As of June 30, 2026, we had $587.6 million of cash and cash equivalents and $804.0 million in investments, compared to $559.3 million and $715.6 million, respectively, as of
Current wording
Our principal sources of liquidity include cash flows generated from operations, existing cash and cash equivalents, our marketable securities balances and borrowings available under our Credit Facilities. As of September 30, 2026, we had $532.1 million of cash and cash equivalents and $854.7 million of investments, compared to $559.3 million and $715.6 million, respectively, as of December 31, 2025. Cash and cash equivalents decreased $27.2 million, as cash generated from operations, primarily premium and reinsurance collections net of claim and reinsurance payments, was more than offset by $168.6 million of net purchases of fixed maturity securities, the repayment of debt and share repurchases. Investments increased $139.1 million, primarily due to those purchases as we redeployed cash into longer-duration fixed maturity securities, partially offset by a $29.8 million increase in net unrealized losses.
Previous wording
Net cash provided by operating activities was $166.6 million for the six months ended June 30, 2026 compared to net cash provided by operating activities of $44.1 million for the comparable period in 2025. The increase in cash provided by operating activities relates primarily to timing of cash flows associated with premium collection, claim and reinsurance payments as well as reinsurance reimbursements during the six months ended June 30, 2026 compared to the six months ended June 30, 2025.
Current wording
Net cash provided by operating activities was $176.2 million for the nine months ended September 30, 2026 compared to net cash provided by operating activities of $168.4 million for the prior-year period. The increase in cash provided by operating activities relates primarily to timing of cash flows associated with premium collection, claim and reinsurance payments as well as reinsurance reimbursements during the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025.
Previous wording
Net cash used in investing activities for the six months ended June 30, 2026 was $96.9 million as compared to net cash provided by investing activities of $3.2 million for the comparable period in 2025. The change in cash used in investing activities relates primarily to timing of investment maturities and re-investment of proceeds as well as availability of existing cash to invest in longer duration fixed income securities to lock in current interest rates.
Current wording
Net cash used in investing activities for the nine months ended September 30, 2026 was $159.9 million, compared to $21.1 million for the prior-year period. The increase relates primarily to the timing of investment maturities and the reinvestment of proceeds, as well as additional cash invested in longer-duration fixed income securities to extend duration and capture higher yields, partially offset by the collection of the $11.0 million promissory note received in connection with the 2025 sale of real estate.
Previous wording
Net cash used in financing activities was $40.9 million for the six months ended June 30, 2026, compared to $24.1 million for the comparable period in 2025. The change was primarily driven by the repurchase of common stock of $24.6 million, the surrender of restricted stock to satisfy tax withholding obligations of $8.9 million, and the payoff of a $5.5 million FHLB loan. By comparison, cash used in financing activities during the 2025 period primarily reflected repayments of the $19.2 million FHLB‑ATL loan and $4.8 million payment on the term note agreement.
Current wording
Net cash used in financing activities was $43.5 million for the nine months ended September 30, 2026, compared to $37.2 million for the prior-year period. The change was primarily driven by the repurchase of common stock of $26.3 million, the surrender of restricted stock to satisfy tax withholding obligations of $8.9 million, and the payoff of a $5.5 million FHLB loan. By comparison, cash used in financing activities during the 2025 period primarily reflected repayments of the $19.2 million FHLB‑ATL loan and the $10.7 million payment on the mortgage loan.
Previous wording
Term Loan Facility. The principal amount of the Term Loan Facility under the Amended and Restated Credit Facility amortizes in quarterly installments beginning with the close of the fiscal quarter ending December 31, 2025, in an amount equal to $937,500 per quarter, payable quarterly, and increasing to approximately $1.4 million per quarter commencing with the quarter ending September 30, 2028, with the remaining balance payable at maturity in July 2030. As of June 30, 2026, there was $72.2 million in aggregate principal amount outstanding under the Term Loan Facility and as of December 31, 2025, there was $74.1 million in aggregate principal outstanding under the term loan facility under the Prior Credit Agreement.
Current wording
Term Loan Facility. The principal amount of the Term Loan Facility under the Amended and Restated Credit Agreement amortizes in quarterly installments beginning with the close of the fiscal quarter ending December 31, 2025, in an amount equal to $937,500 per quarter, payable quarterly, and increasing to approximately $1.4 million per quarter commencing with the quarter ending September 30, 2028, with the remaining balance payable at maturity in July 2030. As of September 30, 2026 and December 31, 2025, there was $71.3 million and $74.1 million, respectively, in aggregate principal amount outstanding under the Term Loan Facility under the Amended and Restated Credit Agreement.
Previous wording
Revolving Credit Facility. The Revolving Credit Facility allows for borrowings of up to $50 million inclusive of a sublimit for the issuance of letters of credit equal to the unused amount of the Revolving Credit Facility and a sublimit for swingline loans equal to the lesser of $25.0 million and the unused amount of the Revolving Credit Facility. Immediately prior to entering into the Amended and Restated Credit Agreement the outstanding balance under the revolving credit facility under the Prior Credit Agreement was $10.0 million, which amount was repaid in connection with the Amended and Restated Credit Agreement. During 2024, the Company secured letters of credit in aggregate of $24.4 million with a maturity date of March 16, 2025. There were no draws on the letters of credit during 2025, which were cancelled effective on their maturity date of March 16, 2025. On December 3, 2025, the Company secured letters of credit in aggregate of $32.0 million with a maturity date of December 31, 2026, with no draws as of December 31, 2025. In June 2026, the Company cancelled all outstanding letters of credit issued under the Revolving Credit Facility and paid $331,767 of letter of credit issuance fees. As of June 30, 2026, the Company had no outstanding letters of credit issued under the Revolving Credit Facility.
Current wording
Revolving Credit Facility. The Revolving Credit Facility allows for borrowings of up to $50 million inclusive of a sublimit for the issuance of letters of credit equal to the unused amount of the Revolving Credit Facility and a sublimit for swingline loans equal to the lesser of $25.0 million and the unused amount of the Revolving Credit Facility. Immediately prior to entering into the Amended and Restated Credit Agreement the outstanding balance under the revolving credit facility under the Prior Credit Agreement was $10.0 million, which amount was repaid in connection with the Amended and Restated Credit Agreement. During 2024, the Company secured letters of credit in aggregate of $24.4 million with a maturity date of March 16, 2025. There were no draws on the letters of credit during 2025, which were cancelled effective on their maturity date of March 16, 2025. On December 3, 2025, the Company secured letters of credit in aggregate of $32.0 million with a maturity date of December 3, 2026, with no draws as of December 31, 2025. In June 2026, the Company cancelled all outstanding letters of credit issued under the Revolving Credit Facility and paid $331,767 of letter of credit issuance fees. As of September 30, 2026, the Company had one outstanding letter of credit issued under the Revolving Credit Facility in the amount of $30,000, which was issued in connection with one of the Company's office leases.
Previous wording
The applicable margin for loans under the Credit Facilities varies from 2.50% per annum to 3.00% per annum (for SOFR loans) and 1.50% to 2.00% per annum (for base rate loans) based on our consolidated leverage ratio ranging from less than or equal to 1-to-1 to greater than 1.5-to-1. Interest payments with respect to the Credit Facilities are required either on a quarterly basis (for base rate loans) or at the end of each interest period (for SOFR loans) or, if the duration of the applicable interest period exceeds three months, then every three months. As of June 30, 2026, the borrowings under the Term Loan Facility were accruing interest at a rate of 6.370% per annum.
Current wording
1-to-1 to greater than 1.5-to-1. Interest payments with respect to the Credit Facilities are required either on a quarterly basis (for base rate loans) or at the end of each interest period (for SOFR loans) or, if the duration of the applicable interest period exceeds three months, then every three months. As of September 30, 2026, the borrowings under the Term Loan Facility were accruing interest at a rate of 6.186% per annum.
Previous wording
In addition to paying interest on outstanding borrowings under the Revolving Credit Facility, we are required to pay a quarterly commitment fee based on the unused portion of the Revolving Credit Facility, which is determined by our consolidated leverage ratio. As of June 30, 2026, the Company paid in commitment fees in aggregate of $166,641 as it relates to the unused portion of the Revolving Credit Facility.
Current wording
In addition to paying interest on outstanding borrowings under the Revolving Credit Facility, we are required to pay a quarterly commitment fee based on the unused portion of the Revolving Credit Facility, which is determined by our consolidated leverage ratio. For the nine months ended September 30, 2026, the Company paid in commitment fees in aggregate of $275,382 as it relates to the unused portion of the Revolving Credit Facility.
Previous wording
The Amended and Restated Credit Agreement contains, among other things, covenants, representations and warranties and events of default customary for facilities of this type. The Amended and Restated Credit Agreement requires the Company to maintain, as of each fiscal quarter (1) a maximum consolidated leverage ratio of 2.00 to 1.00, (2) a minimum consolidated fixed charge coverage ratio of 1.20 to 1.00 and (3) a minimum consolidated tangible net worth for the Company and its subsidiaries, which is required to be not less than the sum of 75% of consolidated tangible net worth measured as of the fiscal quarter ended September 30, 2025 plus 25% of positive consolidated net income (including its subsidiaries and regulated subsidiaries) plus the net cash proceeds of any equity transactions. Events of default include, among other events, (i) nonpayment of principal, interest, fees or other amounts; (ii) failure to perform or observe certain covenants set forth in the Credit Agreement; (iii) breach of any representation or warranty; (iv) cross-default to other indebtedness; (v) bankruptcy and insolvency defaults; (vi) monetary judgment defaults and material nonmonetary judgment defaults; (vii) customary ERISA defaults; (viii) a change of control of the Company; and (ix) failure to maintain specified catastrophe retentions in each of the Company’s regulated insurance subsidiaries or observe specified reinsurer concentration limits.
Current wording
The Amended and Restated Credit Agreement contains, among other things, covenants, representations and warranties and events of default customary for facilities of this type. The Amended and Restated Credit Agreement requires the Company to maintain, as of each fiscal quarter (1) a maximum consolidated leverage ratio of 2.00 to 1.00, (2) a minimum consolidated fixed charge coverage ratio of 1.20 to 1.00 and (3) a minimum consolidated tangible net worth for the Company and its subsidiaries, which is required to be not less than the sum of 75% of consolidated tangible net worth measured as of the fiscal quarter ended September 30, 2025 plus 25% of positive consolidated net income (including its subsidiaries and regulated subsidiaries) plus the net cash proceeds of any equity transactions. Events of default include, among other events, (i) nonpayment of principal, interest, fees or other amounts; (ii) failure to perform or observe certain covenants set forth in the Amended and Restated Credit Agreement; (iii) breach of any representation or warranty; (iv) cross-default to other indebtedness; (v) bankruptcy and insolvency defaults; (vi) monetary judgment defaults and material nonmonetary judgment defaults; (vii) customary ERISA defaults; (viii) a change of control of the Company; and (ix) failure to maintain specified catastrophe retentions in each of the Company’s regulated insurance subsidiaries or observe specified reinsurer concentration limits.
Previous wording
As of June 30, 2026 and December 31, 2025, there was $885,000 principal amount of outstanding Convertible Notes, net of $21.1 million of Convertible Notes held by an insurance company subsidiary.
Current wording
As of September 30, 2026 and December 31, 2025, there was $855,000 and $885,000, respectively, in principal amount of outstanding Convertible Notes, net of $21.1 million of Convertible Notes held by an insurance company subsidiary.
Previous wording
The information set forth under Note 1 to the condensed consolidated financial statements under the caption “Basis of Presentation and Significant Accounting Policies” is incorporated herein by reference. We do not expect any recently issued accounting pronouncements to have a material effect on our condensed consolidated financial statements.
Current wording
The information set forth under Note 1 to the condensed consolidated financial statements under the caption “Basis of Presentation and Significant Accounting Policies” is incorporated herein by reference. Other than ASU 2024-03, we do not expect any recently issued accounting pronouncements to have a material effect on our condensed consolidated financial statements.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
The applicable margin for loans under the Credit Facilities varies from 2.50% per annum to 3.00% per annum (for SOFR loans) and 1.50% to 2.00% per annum (for base rate loans) based on our consolidated leverage ratio ranging from less than or equal to
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
Net income increased to $61.7 million, or $2.05 per diluted share, compared with $48.0 million, or $1.55 per diluted share, in the prior-year quarter. The increase was primarily driven by higher revenue and lower losses. Revenue growth reflected lower ceded premiums, which increased net premiums earned, as well as higher investment income from a larger invested asset base. Losses decreased primarily due to favorable prior-year loss development and lower weather-related losses.
Previous report — wording carried elsewhere
Net investment income was $20.5 million for the six month period ended June 30, 2026, up 16.2% from $17.6 million in the prior year period, driven primarily to higher average cash and invested asset balances and the reinvestment of maturing assets at higher yields, partially offset by lower yields on money market funds and bank sweep accounts resulting from the current interest rate environment.